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Exploring Third-Party Logistics and Partnering in Construction - A Supply Chain Management Perspective

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The construction industry is associated with problems such as low productivity and high costs. This has been highlighted in several government-funded reports in both Sweden and in the UK during the course of over two decades. The construction industry is a large industry sector employing hundreds of thousands and a large contributor to a country’s GDP. The problems therefore have a large impact on society. Some of the problems are rooted in the organizational structure of the construction industry. Compared to other manufacturing industries, the construction industry is organized in temporary organizations. The temporary organizations cause temporary supply chains, fragmentation among construction industry actors and adversarial relationships between those actors. Partnering has been but forward as a solution to overcome the temporariness and the adversarial relationships in the construction. Another solution to mitigate the problems suggested in the reports is supply chain management (SCM). Both concepts have been taken from the manufacturing industries and partnering has been more successful compared to SCM in the construction industry. In the construction industry the progress towards SCM has focused on logistics. In recent years dedicated third-party logistics (TPL) solutions have emerged in the Swedish construction industry, where a company is hired to manage the logistics in a construction project. The purpose with the research presented in this licentiate thesis is to explore how client initiated TPL solutions and partnering can be facilitators for SCM in the construction industry. Being a new phenomenon in the construction industry TPL solutions provide a logistical competence not necessarily included in a traditional construction project. Therefore, TPL solutions are of particular interest when studying the realization of SCM in the construction industry. In the process of realizing SCM in the construction industry, the construction clients have been put forward as having a crucial and important role. The clients are the initiator and funder of construction projects and as such the client can influence the course of a construction project. Therefore, it is of interest to study how the client can take an active role in this process. Initiating a TPL solution in a construction project is one way for a client to take an active part in the realization of SCM in construction. However, in order to study how clients can take an active role towards the realization of SCM in the construction industry, there have to be an understanding of how SCM is to be adopted to the construction industry context. SCM that derives from the manufacturing industry is designed to be used in long-term relationships with permanent organizational structures. The construction industry on the other hand is associated with short-term relationships and a temporary organizational structure. Partnering that is designed to mitigate the temporariness and establish long-term relationships have been quite successful in the construction industry, and could therefore be used as a facilitator for SCM in construction. To study the use of client initiated TPL-solutions in construction and the realization of SCM in the construction industry the following research questions have been addressed: RQ1: To what extent can a third-party logistics solution be a facilitator for client driven SCM in the construction industry? RQ2: How will upstream and downstream tiers be affected when a thirdparty logistics provider is used in a construction project? RQ3: How can partnering be used a mean to facilitate the realization of SCM in the construction industry? To answer the research questions two main methodologies have been used; case study for the empirically grounded research and conceptual studies for the analysis of the case studies as well as for comparing the two concepts of partnering and SCM. All questions have been grounded in literature and previous research. The findings of this research is therefore grounded in both theory and in practice. The main findings of this research is that TPL solutions are not a quick fix for realizing SCM in the construction industry. However, if used right a TPL solution can be an effective tool to address logistical issues in a construction project and to establish an interface between the supply chain and the construction site. By initiating a TPL solution the client addresses the importance of logistical competence in a construction project. A TPL solution does not have a purpose of its own; a TPL solution is a service function to the construction project, providing expertise on logistics management. There are also a number of driving forces and concerns that have been identified, if they are addressed prior to a TPL solution is implemented, the likelihood of its success will increase. Furthermore, both partnering and SCM rely on high trust and share several key components and issues that have to be addressed. Partnering on strategic level with several suppliers included can even be hard to distinguish from SCM. Wherefore, partnering is considered a facilitator for the realization of SCM in construction. By addressing the necessary issues in both concepts a good foundation for SCM is established.
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... Coordination helps to free time of construction workers for value adding tasks, otherwise spent on material handling or waiting (Ekeskär, 2016). Therefore, coordination of construction logistics operations leads to improvements in terms of cost reduction, improved quality, reduced lead times, increased productivity and increased sustainability (Ekeskär, 2016). ...
... Coordination helps to free time of construction workers for value adding tasks, otherwise spent on material handling or waiting (Ekeskär, 2016). Therefore, coordination of construction logistics operations leads to improvements in terms of cost reduction, improved quality, reduced lead times, increased productivity and increased sustainability (Ekeskär, 2016). While no operational transshipment or financial data was obtained, many transport data points used in the external cost calculations overlap with delivery planning data which was sourced from the BCCC operations, and the construction sites' delivery planning and building plan. ...
... This allowed to contextualize the environmental impact assessment with operational planning indicators. To this end, the most important planning indicators were used based on existing CCC literature (TNO, 2018;Guerlain et al., 2019;de Vylder et al., 2020;Quak et al., 2011;Ekeskär 2016;Nolz, 2021;TfL (2016)), adapted to the local IWT BCR case where possible. The values from literature are taken as a benchmark (BAU) for comparison to the water-bound BCCC setup. ...
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Purpose The environmental logistics impact is significant in urban areas, characterised by high receptor densities, less accessible sites and limited storage space. With the aim to reduce negative externalities generated by urban construction transport and improve the use of existing inland waterway transport (IWT) infrastructure, the City of Brussels has implemented a water-bound (Brussels) Construction Consolidation Centre ((B)CCC). While the concept of a CCC has been implemented in different European cities, limited CCC transport impact studies are available. This paper assesses the environmental off-site road and IWT’s transport performance of the multimodal BCCC case in the Brussels-Capital Region. Design/methodology/approach The sustainability impact of the BCCC is evaluated using economic external cost calculations, contextualised with transport planning indicators. Subsequently, findings were compared to business-as-usual (BAU) operations without a CCC as part of a scenario evaluation, for the 24 large construction sites supplied through the CCC between Sep-2019 and Dec-2020. Findings Improvements in the IWT sector are necessary to tackle local emissions (NOx, PM), which rise significantly compared to BAU (+257%), mainly attributable to less performant -yet ubiquitous- vessel engines and their long running life. In contrast, other externalities decreased, most noticeably on congestion costs (-91%), climate change (-66%), noise (-79%) and infrastructure costs (-60%). Overall, €49,404.67 of external costs are saved annually, a 59% reduction compared to BAU. Additionally, improvements are observed on transport planning and efficiency, with 73% timely deliveries and 93.32% delivery compliance, hence respecting the Just-In-Time and Just-In-Place principles. Research limitations/implications Promising results are shown to incentivize industry and policy makers for adopting a CCC in light of alleviating the impact of urban construction logistics (CL), if the overall external costs and mobility impacts are considered. Results should further be compared to other logistic solutions to evaluate complementary measures, including more differentiated scenario evaluations. Practical implications Although IWT alleviates road network use, air pollution from vessels should be addressed. An IWT-CCC can offer decision-makers a transport planning solution to decrease urban nuisances (in particular congestion) and increase resource efficiency use, if specific IWT-CCC and CL applicability requirements are considered. Originality/value While CCCs have been implemented across European cities, limited data is available on their environmental impact. This paper adds knowledge to the sector’s impact mitigation potential using IWT-CCC, hence offering insights for decisional support and policy recommendations.
... Besides the reduction of traffic related to construction tasks, we aim at optimizing resource-efficiency, referring to human resources as well as time. According to Ekeskär (2016), in the construction industry, a large part of construction workers' workdays is spent on non-value adding tasks, such as material handling and waiting (for material to be delivered, for other tasks to be finished, etc.). Less than half of the deliveries in the construction industry are delivered damage free and in the right amount, to the right location and on time (Ekeskär 2016). ...
... According to Ekeskär (2016), in the construction industry, a large part of construction workers' workdays is spent on non-value adding tasks, such as material handling and waiting (for material to be delivered, for other tasks to be finished, etc.). Less than half of the deliveries in the construction industry are delivered damage free and in the right amount, to the right location and on time (Ekeskär 2016). Coordination helps to free time of construction workers for value adding tasks, otherwise spent on material handling or waiting. ...
... Coordination helps to free time of construction workers for value adding tasks, otherwise spent on material handling or waiting. Coordination of construction logistics operations leads to improvements in terms of cost reduction, improved quality, reduced lead times, increased productivity and increased sustainability (Ekeskär 2016). ...
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... Previous research has focused on the effect of CLS's or third-party logistics (TPL) in construction from either a supply chain management (SCM) perspective (cf. Ekesk?r, 2016), the effect that these concepts have on the construction site (cf. , or from a city logistics perspective (cf. ...
... In the construction industry, these solutions are still a rather rare phenomenon (cf. Ekesk?r, 2016), especially when proposed as joint solution for multiple construction stakeholders and projects. The rarity of these solutions indicates that there is a research gap in how these construction logistics solutions affect material flows and costs, as well as how they are perceived by different stakeholders. ...
... There is however, a lack of research regarding governance strategies for construction logistics solutions. Ekesk?r andSundquist, et al. (2017) have both studied CLC's and its governance impact in specific projects. There are also some reports and thesis work investigating the use of CLC's in for example Stockholm (cf. ...
Thesis
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... Lean construction is an innovative construction approach with the main focus point on continuous improvement of construction practices, waste mitigation, creating value for money, quality project management and supply chains, and enhanced communication (Singh & Kumar, 2020;Jiang et al., 2016;Sapuay, 2016;Silvius et al., 2017). Ekeskär (2016) summarized the construction supply chains as being cost-driven, having a fluid interface between the site and the supply chain as well as unpredictable logistics dynamics at the site. ...
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... (Vidalakis et al. 2011) agree on the importance of intermediary organizations in best managing construction logistics. An array of research presents case studies on the use of third party logistics in construction (Ekeskär 2016;Sundquist et al. 2017), network design models for construction logistics (Motaghedi-Larijani et al. 2012), and models / simulations (Ng et al. 2008;Vidalakis et al. 2011). However, few research focus on the economics underlying such logistics systems in construction. ...
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